There’s No Love for Cliffs Natural Resources Today
It’s not every day that an earnings report is released containing as much bad news as Cliffs Natural Resources’ (NYSE:CLF) fourth-quarter and full-year 2012 results. Suffering from tepid quarter-to-quarter revenue growth throughout the year because of strong economic headwinds, the international mining and natural resources company posted its first annual revenue decline since 2009.
Annual revenues fell 11 percent, pressured by a 23 percent decline in seaborne iron ore pricing, to $5.9 billion. As a result of lower revenues and slightly increased costs and depreciation expenses, the company’s U.S. iron ore sales margin shrank 34.9 percent to $45.13 per long ton. This drove revenues down even though Cliffs Natural Resources’ global iron ore sales increased 5 percent to 42 million tons. For the year, the company recorded a net loss attributable to common shareholders of $6.32 per diluted share, which compares to earnings of $11.48 recorded in 2011.
To be clear, that loss was impacted by several non-cash impairment charges, including $1 billion in goodwill related to the company’s 2011 acquisition of Consolidated Thompson Iron Mines. Excluding charges, full-year net income was $3.45 per diluted share.
While the cost increases and revenue declines are unattractive, one of the real killers out of the report is the board’s decision to slash the company’s quarterly dividend rate…